Page 4 - NorthAmOil Week 02 2022

NorthAmOil COMMENTARY NorthAmOil

Oil sands investment outlook

more favourable amid

stronger crude prices

CNRL’s newly announced capital expenditure budget

increase for this year illustrates the more favourable
investment outlook for oil sands

CANADA CANADIAN Natural Resources Ltd (CNRL) at the mid-point of its targeted output guidance.
has joined other leading oil sands producers Notably, as well as base capital of around
WHAT: in announcing a capital expenditure increase CAD3.65bn ($2.92bn), CNRL has included
CNRL has announced a for 2022. CNRL unveiled a 2022 capex budget roughly CAD700mn ($561mn) of strategic
22% capital expenditure of CAD4.35bn ($3.48bn), up from spending of growth capital in its 2022 budget. By contrast,
increase for 2022. CAD3.48bn ($2.79bn) in 2021, and marking a its 2021 capex budget consisted entirely of
year-on-year increase of over 22%. base capital, with no growth capital. This year’s
WHY: This comes after the other three lead- growth capital will be allocated to CNRL’s long-
It joins other leading ing Canadian oil sands producers – Suncor life, low-decline thermal in situ and oil sands
oil sands producers Energy, Cenovus Energy and Imperial Oil – all mining and upgrading assets in Alberta. CNRL’s
in cautiously raising announced their own capex budget expansions chief financial officer, Mark Stainthorpe, stated
spending amid stronger for 2022 last month. The companies are still pro- that the move had been spurred by the “attrac-
crude prices. ceeding with caution following commodity price tive fiscal and income tax environment” in the
downturns and the other recent challenges faced province.
WHAT NEXT: by the oil sands over the past few years. None- This growth capital will be used to target
Canada’s oil sands theless, crude prices continue to strengthen, with incremental production in 2023 and beyond,
producers are also Western Canadian Select (WCS) up by around and is expected to result in an output increase of
exporting record volumes 45% since this time last year, and this is encour- 63,000 barrels per day (bpd) by 2025.
overseas thanks to new aging oil sands producers to ramp up spending. CNRL sought to emphasise that it contin-
pipeline links. ues to act and spend in a disciplined manner. It
On the up cited debt reduction of CAD7.3bn ($5.8bn) that
CNRL is Canada’s largest oil and gas producer it had achieved in 2021, and said that this year
with a broad asset mix beyond the oil sands. In it would target allocating 50% of free cash flow
2022, the company is targeting a production mix (FCF) to share repurchases and the other 50%
that will consist of 46% light and synthetic crude to the balance sheet, while also pursuing fewer
oil (SCO), 28% heavy crude and 26% natural gas, acquisitions.

CNRL’s 2022 capex
budget includes growth
capital allocated to oil
sands assets.

P4 www. NEWSBASE .com Week 02 13•January•2022